A case study of Japanese multinational companies in the UK

Researched by:Dipak R. Basu &

Victoria MiroshnikNagasaki University, Japan

Presented by:Muhammad Hassan

This research analysed the HRM system of Japanese automobile companies (Toyota & Nissan), in their overseas production plants in the UK and have tried to analyse differences if any between their original HRM system in Japan and in their foreign operations. This research found out that these companies, as far as their internal operations are concerned, have tried to implement their original practices in spite of cultural differences. However, in the case of production management system they are not completely successful because of organisational differences in their foreign locations. This research analysed the effects of these novel practices on the industrial scene in the UK in general.

Japanese manufacturing organisations have made a lot of inroads in overseas production bases. The successes of their enterprises have raised interests on the system of production and organisation peculiar to the Japanese business firms.

(Wickens, 1987; Suzaki, 1987)

Particularly that is true about the automobile production sector where non-Japanese firms are adopting Japanese methods of management in a number of countries in order to compete effectively against Japanese firms

(Womack et al., 1990; Monden, 1983; Hayes, 1981; Imai, 1986).

Japanese system of management is a complete philosophy of organisation

which can affect every part of the enterprise.

There are three basic ingredients:

1. Lean Production System2. TQM3. HRM

(Ohno, 1978; Nohara, 1985).

The purpose of this paper is to analyze management styles in Japanese automobile companies in their foreign locations and to examine how far they maintain their original management styles in foreign locations.

Lean manufacturing or lean production, which is often known simply as "Lean", is the practice of a theory of production that considers the expenditure of resources for any means other than the creation of value for the presumed customer to be wasteful, and thus a target for elimination. In a more basic term, More value with less work.

At all levels of Lean Production System fundamental idea is ``humanware'' (Shimada, 1993) which is described in``Humanware'' is defined as the integration and interdependence of machinery and human relations and a concept to differentiate between different types of production systems.

The method of analysis is basically interviews with the workers and managers of these two companies, Nissan and Toyota, in both Britain and Japan. This research described in detail questionnaires that were used and the answers were received. Researchers visited the Sunderland plant of Nissan and the Barnaston plant of Toyota. In Japan they visited the Sizuoka plant of Nissan and the Nagoya plant of Toyota. They had interviewed 250 workers chosen randomly in each plant. For questions regarding management strategies, They interviewed vice-presidents, plant managers and directors of these companies in the UK.

There are some important features, which

are as follows;Continuous ImprovementZero defects Just-in-timePull instead of pushMultifunctional teamsDecentralized ResponsibilitiesVertical Information System

Lean production system is not the only alternative to the

traditional production system. There are:1. German style quality production model based on

a highly skilled work consensus;2. Systemic rationality model, which are common in

the information technology firms.3. The Swedish model of Volvo motor company,

reflective production system, in which production teams have direct contact with the customers

(Cusumano, 1994; Redher, 1994; Sasaki, 1994; Sandberg, 1995; Nomura, 1993; Altmann, 1995;

Jonsson, 1995)

Strategic management of a multinational company involves evaluations of its own domestic competitiveness and utilizes these experiences in a global setting. At the same time the company has to decide the configurations of its operations across the world, i.e. where to locate which facility.

HistoryThe philosophy of the company in

the UK and the management systemOrganizational layout of production

management system

``Nissan's Sunderland (UK) plant aims to build profitably the highest

quality car sold in Europe to achieve the maximum possible customer satisfaction and thus ensure the

prosperity of the company and its staff''.

Nissan plant in Sunderland, UK includes a car and component manufacturing facility, an engine machining and assembly plant, a foundry, a plastics injection and blow-moulding plant and a service parts operation all on one site.Environmental considerations are high in the list of priorities in the production system.

The optimum design set-up according to the internal ``kanban'' system. In the ``kanban'' system each department of the production process should be located in a logical style so as to provide a continuous flow of materials as demanded by the production process. The idea is not to have any inventory in each department but to demand when required.

Quality is not something left to quality control staff. It is the responsibility of every single person in the organization. Results are regularly reviewed and fed back to help improve individual processes. Parts quality is also constantly monitored using special test rigs backed by extensive chemical and metallurgy laboratory facilities. The plant's own quality check process is supplemented at random by Nissan's world auditors.

The aim of the personnel management system in Nissan plant is to create ``mutual trust and cooperation between all people within the plant''. It aims for flexibility in the sense of expanding the role of all staff to the maximum extent possible and puts quality consciousness as the key responsibility above all. The company believes that “high caliber”, well-trained & motivated people are the key to success.

There are three main elements in the improved techniques introduced into UK manufacturing in the past ten years from 1986 to 1996:1.a commitment to ``Kaizen'' or continuous

improvement.2.cooperative relationships between workers,

managers and suppliers.3.emphasis on measuring all aspects of business,

from serious faults to misplaced labels to identify precisely what needs improvements.

HistoryProduction and operation system

Toyota UK's aim is to satisfy the customer by providing the highest quality at lowest possible cost in a timely manner with the shortest possible lead times. It has a complete manufacturing operation including press and weld, paint, plastics, assembly and engine plus a comprehensive environmental control facility. Quality is built in at every stage and confirmed throughout the process.

Nissan Toyota-Partners on technology, management -no responsePractices & on market entry.-establish smooth relationships in supply -no responseChains & distributions.-Successful internal “just-in-time” production -no responseInventory management system not yet in external-Local people are in command -Japanese are

managers at every level-Have local partners -have no local

partners-external “kanban” system -no “kanban”system-employees can develop to their full potential -same-team working environment -same-frequent training courses off-the-job -same

Japanese companies no longer depend exclusively on lean production system.

Owing to changes in the external economic environments, collapse of the ``bubble'' economy of the late 1980s, rise in the exchange value of the yen which makes Japanese exports too expensive, rising costs of labour in Japan have provoked changes in the management system of the Japanese companies

(Katayama and Bennett, 1996; Miyai, 1995; CJAWU, 1993).

The production system is changing and gradually adopting a more flexible systemwith the following characteristics: Production system is more flexible in order to adapt

itself to changes in demand; this will reduce costs of production.

Achievement of lower fixed costs using fewer frequent changes in products and less replacement of equipment is being achieved.

Technological solutions are being implemented in order to have flexibility in production system design on both downstream and upstream products.

The production system is changing and gradually adopting a more flexible systemwith the following characteristics: Efforts are there to reduce work-in-progress and set-up

times by grouping of parts and products into families. Standardized modules of established and reliable design

are being incorporated into new products which allow greater mixing of products.

Mixing of productions is there in order to allow a variety of products to be manufactured without large inventories.

There are extensive usages of Kaizen activities and TQM (total quality management) and TPM (total productive maintenance).

Japanese companies in the UK have tried to maintain their own management styles despite cultural differences and have succeeded in many ways not only in their own plants but have influenced a number of UK companies associated with their operations. Although the basic features of Japanese style management system (i.e. just-in-time production system) cannot be transplanted in the UK in the same way that it was implemented in Japan, both Nissan and Toyota have successfully implemented this system internally in their plant management system as far as the relationships between workers managers are concerned, which is extremely important in a class dominated society like the UK.